Correlation Between Shinhan Financial and Zencash Investment

Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Zencash Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shinhan Financial and Zencash Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shinhan Financial Group and Zencash Investment Trust, you can compare the effects of market volatilities on Shinhan Financial and Zencash Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shinhan Financial with a short position of Zencash Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Zencash Investment.

Diversification Opportunities for Shinhan Financial and Zencash Investment

0.24

Correlation Coefficient

Shinhan Financial  Zencash Investment

Modest diversification

The 3 months correlation between Shinhan and Zencash is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Zencash Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zencash Investment Trust and Shinhan Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shinhan Financial Group are associated (or correlated) with Zencash Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zencash Investment Trust has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Zencash Investment go up and down completely randomly.

Pair Corralation between Shinhan Financial and Zencash Investment

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.23 times more return on investment than Zencash Investment. However, Shinhan Financial Group is 4.41 times less risky than Zencash Investment. It trades about -0.03 of its potential returns per unit of risk. Zencash Investment Trust is currently generating about -0.25 per unit of risk. If you would invest  3,384  in Shinhan Financial Group on December 20, 2024 and sell it today you would lose (102.00) from holding Shinhan Financial Group or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Shinhan Financial Group  vs.  Zencash Investment Trust

Shinhan Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shinhan Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Shinhan Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Zencash Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zencash Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Shinhan Financial and Zencash Investment

The main advantage of trading using opposite Shinhan Financial and Zencash Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Zencash Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zencash Investment will offset losses from the drop in Zencash Investment's long position.

The idea behind Shinhan Financial Group and Zencash Investment Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.